The circular-flow approach is decidedly Neoclassical, and suffers from many problems which traditional Austrians would notice. The circular-flow diagram’s greatest problem is, in fact, its circularity ...

The Circular Flow Diagram has dominated economic thought for over a century. Yet, all along we’ve known its shortcomings: over-aggregation, static capital, instantaneous production, and homogeneous ...

3 key takeaways Copy link to section. Injections to the circular flow of income include investment, government spending, and exports, which introduce additional funds into the economy.